24 hour timeframe
Last week, the pound showed a 5-month growth record against the US dollar. From the lowest to the highest, about 400 points, or 4 cents, were passed. In the previous review, we already wrote that the Parliament decided to postpone the Brexit date to January 31, 2020. The full conclusion of MPs can be described as follows: Boris Johnson has no right to implement a "hard" Brexit until January 31, 2020 without the approval of Parliament. That is, after January 31, Johnson, if he remains in the chair of the British Prime Minister, may again push through the disordered "divorce" with the European Union. However, there is still a lot of time until January 2020, so it's now hardly worth it to engage in reasoning, which Johnson will do in 5 months.
Meanwhile, Minister for Labor and Pensions Amber Rudd announced her resignation from the Conservative Party (!!!), as well as her resignation from the Cabinet of Ministers. It is difficult to say whether this is the decision of Mrs. Rudd or the pressure of Boris Johnson, who had previously threatened members of the Conservative Party with exclusion from this and from the ranks of MPs if they refuse to support his initiatives on Brexit issues. One way or another, the next minister will leave his post. Recall that during the reign of Theresa May, more than 10 senior politicians left their posts because of disagreements with the prime minister in matters of Brexit. The story repeats itself ... Mrs. Rudd also noted that "she cannot stand by when the moderate Conservatives are expelled from the Party." I think it's clear to everyone who is exactly responsible for the expulsion... Mrs. Rudd sent a letter to Boris Johnson, in which she said that she did not believe that the prime minister's goal was to leave the EU with an agreement.
At the same time, another initiative group of MPs is preparing a lawsuit against Boris Johnson if he refuses to comply with the new law, which obliges him to ask for European Union leaders to delay Brexit. Johnson's last words on the law prohibiting the "hard" Brexit until October 31 were: "I'd rather die in a ditch than ask for a respite." Thus, it is easy to guess that Johnson does not want to postpone Brexit, and will also look for ways to circumvent this obligation. At the same time, the behavior of the odious prime minister is already easily predicted by deputies. Realizing that Johnson was ready to take any measures to avoid the delay of Brexit, the deputies began to consider the possibility of going to court if the country's government refused to comply with the new law. Johnson said a little later: "They just passed a law that obliges me to beg Brussels to postpone Brexit. I will never do that." "Boris Johnson may end up in jail if he refuses to endure Brexit," said Ken McDonald of the British Attorney's Office.
In the meantime, political passions are boiling in the UK, the pound/dollar pair completely ignores any macroeconomic statistics. Fortunately, it was a little last week in the United Kingdom. But the whole package of American data was not taken into account by traders. As for the technical picture on the higher timeframe, the pound has unexpectedly very interesting growth prospects. Firstly, a false breakdown of the previous low of the pair is clearly visible on the chart. This is a signal for growth. Secondly, the pair updated the previous high, it is also a signal to increase. Third, it overcame the critical line Kijun-sen. Fourth, the fundamental background for the pair unexpectedly changed from "bearish" to "bullish". Of course, by and large, Brexit's next delay cannot be called extra positive news for the pound and for the UK as a whole. However, this is still good news. Given the strong oversold pound (certainly justified by fundamental factors), the pair is likely to grow in September. Boris Johnson's hands are now restrained by the shackles of the newly adopted Brexit blocking law, and with a clear conscience, the Parliament is going on vacation tomorrow arranged by Boris Johnson himself.
Trading recommendations:
The pound/dollar is ready to form an upward trend on the 24-hour timeframe. At the moment, the pair has reached the Ichimoku cloud, which is now an obstacle to the further growth of the GBP/USD pair. Thus, next week the bulls need to continue to develop their success, while they favor the fundamental background.
In addition to the technical picture, fundamental data and the time of their release should also be taken into account.
Explanation of the illustration:
Ichimoku indicator:
Tenkan-sen is the red line.
Kijun-sen is the blue line.
Senkou Span A - light brown dotted line.
Senkou Span B - light purple dashed line.
Chikou Span - green line.
Bollinger Bands Indicator:
3 yellow lines.
MACD indicator:
Red line and bar graph with white bars in the indicator window.
The material has been provided by InstaForex Company - www.instaforex.com